South Africa Airways looks to 2010

14 August 2006

South African Airways and other players in the aviation sector are embarking on a number of multi-million dollar projects to increase efficiency and capacity in preparation for the FIFA 2010 Soccer World Cup.The country’s three main airports in the host cities of Johannesburg, Cape Town and Durban, have been allocated $760 million for infrastructure development.

South African Airways (SAA) are now pinning their hopes on a low-cost airline, which is yet to be named, to fuel growth in the run-up to 2010.

The budget carrier will operate as a separate company, run by a new chief executive and will be flown by a separate pool of pilots.

SAA CE Khaya Ngqula is passionate about the new carrier, according to the country’s Financial Mail and is optimistic about the carrier’s potential to help grow profits by 10 percent year-on-year.

Before the FIFA World Cup, the airline is focused on other sporting efforts and is throwing its support behind the country’s cricket team in the run up to the ICC Cricket World Cup in the Caribbean next year.

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The airline has pledged to divert one of its aircraft to Jamaica for the team to participate in February 2007.

“SAA is justifiably rated as one of the world’s best airlines, and with its multi-faceted support to the South African cricket we, too, will get to the top,” Cricket South Africa CEO, Gerald Majola told reporters.

The upbeat sporting and investment focus comes after the airline was fined, along with Lufthansa on price fixing on the route to Frankfurt and after its full-year profits sank 90 percent.

The fine was due to last summer’s a labor strike that shuttered operations and a spike in fuel prices. The national carrier has also been losing domestic market share to low-cost carriers.

However, the airline has managed to cut operating costs, thanks to lower distribution and commission expenses.

SAA is now focusing on enhancing yields on domestic and international routes. It is also embarking on a multi-faceted turnaround strategy that includes launching its own low-cost carrier by the end of the year.

SAA is also selling 49 percent of its stake in the troubled Air Tanzania and completely severing a failed five-year strategic alliance between the two carriers. Now SAA is trying to recover $20 million it had injected into flag carrier when it acquired its stake in the airline.

In the latest Skytrax survey South African Airways was voted best airline in Africa, with a total of 13.6 million participants in the survey.

The airline has also been voted as Africa’s Leading Airline at last year’s World Travel Awards and is being nominated again this year. ——-